5 ADDITIONAL MEASURES THAT COULD BE ADDED IN THE IMPLEMENTING
5.2 Compulsory liability insurance for persons not required to take out insurance
freedom of the States Parties to implement domestic rules extending the insurance requirement to other persons than the registered owner of the ship, taking into consideration that the relevant provision of the Convention does not extend such requirement to anyone else, not even to those who have been charged with strict liability, namely the bareboat charterer, the manager and the operator.
Introductorily, an understanding of the rationale for compulsory insurance is advisable.
First, the requirement for insurance intends to guarantee that victims of oil pollution will be able to obtain compensation even if the shipowner becomes insolvent. Second, the right for direct action, associated with the requirement for compulsory insurance, facilitates the accessibility problem, in that claimants will not have to seek compensation in remote jurisdictions, running the subsequent risk of not finding there assets to cover the claim.
Third, the requirement for insurance is believed to improve the insurance industry‟s regulation with respect to safety standards on board, as a way of minimising risks. Finally, competition aspects will be regulated to the extent that irresponsible shipowners will not be able to escape the costs for subscribing for insurance.144
During the discussions leading to the adoption of the Bunker Convention, the Japanese delegation proposed an alternative text to the relevant draft provision regulating compulsory insurance, according to which the insurance requirement would be extended to the other parties falling into the definition of shipowner. In response, some delegations argued that the situation of the claimants would not be improved by requiring separate insurance cover for other parties, while other delegations expressed their concern about the practical difficulties145 that would arise out of such proposal. The proposal was thus
144 Røsæg, Erik, supra, note 117, pp. 3-4.
145 See Zhu, Ling, supra, note 63, at 139, in fine: One of the practical difficulties related to broadening the insurance requirement seems to be the fact that imposing compulsory insurance on a plurality of parties
rejected and the original draft provision which required insurance only for the registered owner was maintained.146
It seems that the Bunker Convention had the categorical intention to make a distinction between the term “shipowner” applied in the rule providing for strict liability, and the term
“registered owner of the ship” applied in the rule providing for compulsory insurance.147
Following that, it appears to be correct to conclude that the Bunker Convention did not intend to leave the question of compulsory insurance to the discretion of the States Parties.
Hence, the answer to the proposed question is that the States Parties are not free to legislate differently, and extend the insurance requirement to other parties than the shipowner.
A question of another nature (rather than whether it is allowed or not) is whether requiring separate insurance cover from other parties than the registered owner would be advisable, or even necessary, from a practical point of view.
First of all, as one author well emphasized: “The reason why still only one person has to maintain insurance is simply that nothing is added if the same liability is insured several times”.148 Second, it has been already signalled by the insurance market (P&I Clubs) the difficulties of extending the same coverage for parties which are not members of the Clubs.149 That is due to the key characteristic of P&I Clubs, the mutuality, which can be defined as the sharing of liability between the members of the Club on a non-profit basis,
would increase even more the administrative burdens associated with the issuing and monitoring of certificates placed on the State Parties.
146 See IMO LEG 81/4.
147 See IMO LEG 81/4: “It was suggested that the provisions in these articles might be viewed as a package which could provide a practical and workable way forward, given that the Committee had accepted the present definition of “shipowner” contained in article 1(3)”.
148 Røsæg, Erik, supra, note 117, at 12.
149 Ibid.
meaning that they all share the interests and risks with one another in the Club.150 Lastly, another inconvenience that could stem from the requirement for insurance for a plurality of parties would be the practical difficulty to apportionate liability between the parties‟
insurers, what would possibly lead not only to delays in taking response measures, but also to delays in the final settlement of claims.151
In any event, the fact that the bareboat charterer, the manager and the operator are not obliged to take up insurance does not necessarily mean that they are not going to do so, especially considering that they can be held jointly and severally liable together with the registered owner. If they do it, it will be on a voluntarily basis. In this context, mention should be made of the relevant provision of the Bunker Convention relating to the right of recourse of the shipowner against other liable parties.152 The mentioned provision regulating the right of recourse and the provision regulating the parties‟ several and joint liability are inextricably linked.153 Accordingly, the right to seek recovery among the parties listed in the definition of “shipowner” is maintained independently of the Bunker Convention.
Both the Norwegian and the English implementation of the Bunker Convention falls into line with the conclusion reached above, in that the requirement of compulsory insurance was only imposed on the registered owner of the ship.154
150 Zhu, Ling, supra, note 63, at 128.
151 See IMO LEG 81/4/2.
152 Bunker Convention, Article 3(6).
153 See IMO LEG 81/11.
154 See Norwegian Ot.prp. nr. 77(2006-2007), Norwegian Maritime Code, new Section 186. See also English Statutory Instrument 2006 no. 1244, The Merchant Shipping (Oil Pollution) (Bunker Convention) Regulations 2006, Regulation 17 which inserts new Section 163A to the Merchant Shipping Act 1995.